Oil dropped to the lowest in seven months amid a revival in output from Libya and rising volumes of fuel held in floating storage.

Futures lost as much as 2.9% in New York after falling 1.2% Monday. Libya is pumping the most crude in four years after a deal with Wintershall AG enabled at least two fields to resume production. The amount of oil stored in tankers reached a 2017 high of 111.9 MMbbl earlier this month, according to Paris-based cargo tracking company Kpler SAS.

Oil has slipped below $45/bbl as supplies in the U.S. remain plentiful and drillers continue to add rigs, raising concerns output cuts by the Organization of Petroleum Exporting Countries and allies including Russia won’t succeed in draining bloated stockpiles. Traders are storing more crude at sea amid swelling production in the Atlantic region, a sign the market is far from rebalancing.

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“Right now there is little support to be found in light of recent supply-side developments, including further reinstatement of production in Libya, another rise in the U.S. rig count and reports of floating storage building up again,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “Producers are using moral suasion but that appears to be falling on deaf ears for now.”

West Texas Intermediate for July delivery, which expires Tuesday, was down $1.14 to $43.06/bbl on the New York Mercantile Exchange at 1:37 p.m. in London, the lowest since Nov. 14. Total volume traded was about 80% above the 100-day average. The more-active August contract fell $1.09 to $43.34.

Brent for August settlement dropped $1.14 to $45.77/bbl on the London-based ICE Futures Europe exchange. Prices fell 1% to $46.91 on Monday. The global benchmark crude traded at a premium of $2.45 to August WTI.

U.S. inventories probably shrank by 1.2 MMbbl last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Crude stockpiles remain more than 100 MMbbl above the five-year average, according to data from the EIA. American production climbed to 9.33 MMbpd through June 9, near the highest since August 2015.

Source: www.worldoil.com